Who’ll Run Your Organization in the Future?

Is your not-for-profit group prepared for the inevitable departure of its leader?

In one survey by BoardSource, an independent group committed to improving not-for-profit governance, only 34 percent of boards polled had a written CEO succession plan. Still, 50 percent of boards surveyed said they would be confronted with replacing a CEO within the next five years: 25 percent stated that their CEO's intended to leave their post within the next two years, and another 25 percent said that same leadership group intend to leave within three to five years.

Many not-for-profit organizations were founded by individuals committed to a cause. Eventually, these founding leaders leave or pass away, which can leave the group in a state of flux or disarray. It's a problem that founders, boards of directors and high-ranking officials need to address to help ensure the organization will withstand the challenges associated with changes in leadership.

Why You Need a Succession Plan

There has been considerable dialogue in not-for-profit circles about "founder's syndrome," which describes the difficulties that can arise when a single individual brings an organization through the tough times of starting, maintaining financing and successfully overcoming problems. Eventually, the group matures and needs change, but often, the founder may become stagnant, continuing to make decisions in an outdated way regardless of the growth around him or her.

So, what happens if that leader dies or otherwise unexpectedly leaves the organization? Leaders must have a succession plan in place to help sustain growth and keep the vision alive. Those who care about sustainability pay attention to ways they can support their own successions.

It's important to persuade the leader to let go, psychologically and emotionally. It may be true that the organization will never be the same without the person who founded and initially nurtured it, and that it may struggle, at least for a while in his or her absence. Nevertheless, for the well-being of the organization, you must have a succession plan to help the group get through that turmoil.

Five Key Steps

Although the exact process will differ from organization to organization, here are five ways that you — as the leader — can get started developing a solid succession plan:

Prepare for contingencies. From the outset, a good succession plan should provide guidelines for action if one day you suddenly can't perform your usual duties. This is the classic "What if I get hit by a bus?" scenario. Describe the procedures the organization will follow to name your successor.

Think long-term. But even if your departure isn't sudden, you can't just name someone to assume leadership when you're gone. The group needs a plan for training individuals for the future. You might groom several staff who are climbing the ladder or already knocking on the door. Consider people you might want to add to the board of directors. And remember to examine current weaknesses in the organization and come up with ways they can be strengthened.

Put it in writing. These days, this means keeping a digital record of the succession plan. Be sure the final plan is stored in a secure location, presumably in the cloud or on an off-site server. Depending on your circumstances, you might have an attorney participate in or at least sign off on it — particularly where the bylaws require certain legal formalities.

Open the organization to change. This may be a good time to take stock of the organization. Undoubtedly, you're doing some things right, but you might also be doing some wrong. It may be beneficial to try a different approach or to support someone with new ideas. Don't allow the board to become stagnant; include people of diverse backgrounds in the mix. Help the board understand that succession planning isn't just "making a plan." It's a risk management strategy to ensure the continued existence of the organization.

Inspire trust. No matter how your succession plan is crafted, and how detailed it is, it'll have a better chance of succeeding if you show your faith in it. When possible, help with the leadership transition and show support for your successor and the remaining management team. Other stakeholders, including employees of all ranks and donors, will likely take their cues from you.

Finally, remember to use common sense in these endeavors. It can go a long way towards preserving the organization as you had envisioned.

How to Proceed Without a Plan

Suppose for some reason you must depart suddenly with no plan in place. First things first: Don't panic. Second, take forceful, yet measured, action. This may include the following steps:

Have the board appoint an executive committee and empower it to make recommendations for a successor to the board.

Identify a spokesperson for the organization until the new leader is approved.

Draft a communication plan for the public.

Agree on a process to hire the new top gun. Decide whether to promote from within or tap an outside source. Frequently, if a successor hasn't already been selected, an external choice may be preferred.

Identify an interim executive to lead the way and approve additional compensation for this position. The interim executive may become a top candidate for the permanent position.

Define the interim executive's responsibilities, authority and decision-making limits. Also, provide details on any additional functions that should be handled by a second manager.

Facilitate board support and supervision of the interim executive. Designate the primary contact on the board, typically the chairman.

Schedule regular meetings to discuss organizational issues. The board chair is often the primary point of contact for the executive.

Update the executive job description to ensure the right person is identified to lead the organization into the future.

Move swiftly to name the person who ultimately will take over.

Of course, there is a way to avoid having to navigate these many steps: Draft a succession plan well in advance of when you expect it'll be needed. Doing so will provide a blueprint for others and may offer a sense of security to management, staff and donors.

Craig is the Principal-in-Charge of the Sarasota, Florida office of HBK CPAs & Consultants. He began his accounting career in 1999 and joined HBK in 2007.

He provides accounting, audit and financial reporting services to a wide range of industries, including manufacturing, wholesale distribution, not-for-profit, governmental, retail and entertainment.

Additionally, Craig is the leader of HBK’s Nonprofit Services Niche and a member of the firm’s Assurance Practice Committee. He is a recurring speaker, presenting on various accounting, auditing and internal control-related topics internally and for various external organizations. He also frequently authors non-profit articles for several external publications.

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